M Tax losses deducted

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Show at M the tax losses (from an earlier income year) that the fund is claiming. The fund can claim tax losses only to the extent that its total assessable income exceeds total deductions (other than tax losses).

The fund’s tax losses brought forward must first be deducted from the amount of the fund’s net exempt income (section 36-15 of the ITAA 1997). The fund’s net exempt income is the fund’s gross exempt income less the expenses incurred in deriving that income. Example 4c shows the effect of exempt current pension income on tax losses.

Tax losses are not the same as ‘capital losses’ which may result from a capital gains tax event. Do not show net capital losses at M. See V Net capital losses carried forward to later income years at item 13.

The trust loss legislation in Schedule 2F to the ITAA 1936 affects the deductibility of prior year losses by all trusts that are not excepted trusts (as defined in section 272-100 of Schedule 2F to the ITAA 1936), such as non-complying superannuation funds.

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